Land
Not depreciated, unlimited life, cost include real estate fees, clearing, etc.
Land Improvements
Additions to land. Ex. Parking lots
Change in Estimate
Book value(beg. year of change)- Revised S.V / Revised Remaining Useful Life
Asset Turnover Ratio
Net Sales
/ Avg. Total Assets
Straight-Line Depreciation
Cost - Salvage Value
/ Useful life
Same every year
Double-Declining-Balance Depreciation
- 100% / useful years = %
- Double % from step 1
- % from Step 2 x beg. Book value
Book Value
Cost - Accumulated Depreciation
*after useful life book value will be S.V
Units of Production Depreciation
- Cost - Salvage Value
/ total units = dep. per unit - X units produced in period
Lump Sum Purchases
- Plant assets purchased as group
- allocate cost on appraised value
- add all appraised values & divide each asset to find %
cost X % = apportioned cost
Partial Year depreciation
DATES!!!! CLOSEST TO THE 1st
Straight line X fraction of year left. Starting on beg of month closest to 1st !
Ordinary Repairs
- Does not increase life or productivity
- debit repairs expense
Betterments/ Extraordinary Repairs
- increase efficiency & useful life
- Debit plant asset
Discarding Assets
- before discarding, bring depreciation up to date
- fully depreciated: Debit A/D, Credit Asset
- partially depreciated: Debit A/D & Loss on disposal(book value), Credit Plant asset
Depletion
-for natural resources
Cost-Salv Value/total units
x units in period
Intangible Assets
Non physical assets
Used in operations
Intangible Assets Examples
Patent (20yrs) Copyright (life+70yrs) Franchise & licenses -life Trademark -life Leasehold&improvements - life
Goodwill
Intangible asset NOT Amortized
Amortization
Cost/useful life (legal life)
Selling Assets
- Cash = book value
No gain no loss - Cash greater than book value (GAIN-credit)
- Cash less than book value (LOSS- debit)
